IMF Raises India’s FY26 GDP Growth Forecast to 6.4 percent Amid Easing Trade Tensions

The International Monetary Fund (IMF) has revised India’s GDP growth forecast upward to 6.4 percent for both FY2025-26 and FY2026-27, citing easing global trade tensions and improved international financial conditions. This marks a 20-basis point increase from the IMF’s April projection.

In its latest update to the World Economic Outlook, the IMF noted a more favourable external environment, including a softening of U.S.–China trade frictions and a weaker U.S. dollar, down 8 percent since January, which has contributed to a more resilient global economy.

India’s economy is estimated to have grown at 6.5 percent in FY2024-25, the slowest in four years, but it remains one of the fastest-growing major economies. The Reserve Bank of India (RBI) has maintained its growth forecast at 6.5 percent for the current fiscal, while the Finance Ministry has projected a range of 6.3 percent to 6.8 percent. For FY2026-27, the RBI previously estimated growth at 6.7 percent.

Globally, the IMF expects GDP to rise 3.0 percent in 2025 and 3.1 percent in 2026, up slightly from previous estimates. Among other nations seeing upward revisions in growth forecasts are the U.S., China, Canada, Brazil, Saudi Arabia, and Nigeria. China received the largest upgrade, with its 2025 GDP now projected at 4.8 percent, up from 4.0 percent in April, following stronger-than-expected growth in the first half of the year.

Despite the positive revisions, the IMF warned that global tariffs remain ‘historically high’ and policy uncertainty continues to pose risks. It also highlighted a long-term decline in global trade as a share of output, projecting it to fall from 57 percent in 2024 to 53 percent by 2030.

The IMF’s revised outlook reflects cautious optimism, with India positioned to benefit from a gradually improving global trade and investment environment.